Email this article to a friend

Italian buyout firm Clessidra Capital has become what is thought to be the first European private equity firm to launch a hedge fund.

Clessidra launched its fund last month, according to manager Edoardo Ugolini, who said the company hopes to raise €250m ($330m) in two years.

Clessidra will invest in large-cap stocks while short selling equity index futures and plans to follow a market neutral strategy, balancing its long and short positions to minimise its net exposure to the equity market.

Ugolini said he and colleagues had joined Clessidra from Credit Agricole a year ago and have been establishing its operation, including a London office. He said he did not know of another European private equity firm that had launched a hedge fund. He said: “This is possibly the first time the US model has been replicated in Europe.”

Hedge funds’ fee structures are more attractive than those of private equity. Although both industries typically charge between 1.5% and 2% a year for management fees and 20% performance fees, hedge funds charge for any investment gains while private equity firms charge only for gains above a specified hurdle rate. Hedge funds also take performance fees each year while private equity firms wait until the gains have been realised.

Private equity firms may market hedge funds to clients at the same time as their other funds. They may seek to run them using insights gleaned from investigating potential buyouts, although they must take care not to fall foul of insider trading laws.

Clessidra, established by Claudio Sposito, former chief executive of Fininvest, the holding company for the media assets of former Italian prime minister Silvio Berlusconi, raised €1bn for its first buyout fund in 2003. At the time, this was Italy’s largest buyout fund, although the scale of private equity fundraising has grown sharply since.